According to one of the World Bank’s most recent estimates, the coronavirus caused the highest increase in poverty since 1990 as it drove global inequality to new depths. The dispute between the two largest food producers in the world, the Ukraine War and climate shocks, further hampered a rapid rise. The war, which started in February, has drastically reduced supplies; Russia and Ukraine are two of the world’s leading producers of wheat.
The World Bank’s Poverty and Shared Prosperity 2022 – Correcting Course report’s primary findings state that the epidemic caused a dramatic rise in the rate of extreme poverty around the world. This increased from 8.4 percent in 2019 to a projected 9.3 percent in 2020. By the end of 2020, more than 70 million people had been forced into extreme poverty worldwide, bringing the total to over 700 million.
According to the findings, the world’s poorest people lost twice as much income as its wealthiest people, and for the first time in decades, inequality worldwide increased. As many as 685 million people are predicted to still be living in extreme poverty in 2022, making it the second poorest year for poverty reduction in the past 20 years. About 47% of the world’s population, or close to half, experienced financial hardship in 2019.
The report suggests the following structural fiscal policy changes as measures of course correction: 1) Reorient spending away from subsidies toward support targeted at poor and vulnerable groups; 2) Increase public investment that supports long-term development; and 3) Mobilize revenue without harming the poor.